Return of Title IV Funds (With Changes from HERA) Higher Education Reconciliation Act of 2005

1. Session 11 Return of Title IV Funds (With Changes from HERA) Higher Education Reconciliation Act of 2005 (P. L. 109-171) Brian Kerrigan Dan Klock

2. Today’s Agenda • DCL issues • Regulation changes from HERA • R2T4 calculation with HERA changes • Compliance self-monitoring • Questions & answers

3. Presentation Objectives • Bring you up to date on R2T4 changes • Demonstrate changes in calculation • Understand that R2T4 non-compliance is a top finding • Answer questions

4. Dear Colleague Letter (GEN-04-03)

5. Dear Colleague Letter (GEN-04-03) • Title IV credit balance • Aid that could have been disbursed • Verification not completed before withdrawal • No passing grades • Withdrawal – credit hr, non-term program • Date of determination of withdrawal for institution required to take attendance

6. Title IV Credit Balances • Hold credit balance - do R2T4 first • Credit balance is “Aid Disbursed” • See if credit balance changes because of R2T4 • Repay grant overpayment on behalf of student • Release credit balance within 14 days

7. Aid That Could Have Been Disbursed • All aid for period, if late disbursement conditions met before student withdraws (668.164(g)(2)) • However, if limitations apply, aid may not be paid to student (668.164(g)(4))

8. Conditions for a Late Disbursement(need to be before student withdraws) • For all aid (except PLUS) – process date for official EFC on SAR / ISIR • For FFEL / Direct Loan – loan certified or originated • For Perkins / FSEOG – award made

9. Limitations on Making Late Disbursement • No second or subsequent disbursement of FFEL / DL, unless student completes period • No FFEL / DL unless student completes 30-day delay period

10. Limitations on Making Late Disbursement • No Pell Grant without valid SAR / ISIR by deadlines in Federal Register • No 2nd pp Pell if 1st pp not completed • No 2nd pp FFEL / DL if 1st pp not completed

11. Verification • Must complete R2T4 within 45 days • If verification not completed • Return interim disbursements of aid • Only unsubsidized and PLUS loans in R2T4 • If verification completed later – new R2T4 calculation using additional eligible aid

12. No Passing Grades • Institution must have process for determining if student completed period • Institution must document completion of period

13. Withdrawal from Credit Hour Non-term Program • Percentage earned is equal to calendar days completed divided by calendar days in period • Project calendar days in period if student is in a self-paced program

14. Date of Determination that Student WithdrewFor School Required to Take Attendance • No later than two weeks after last date of attendance • Based on attendance records • Date of official notification if prior to that • After end of institution’s absence policy

15. HERA Regulation Changes

16. Programs Specified for R2T4 • Perkins • Direct Loan • FFEL • Pell Grant • Academic Competitiveness Grant • National SMART Grant • FSEOG

17. Post-withdrawal Disbursement - HERA • Credit grant for tuition and fees & room and board (without authorization) and for other charges (with authorization)

18. Post-withdrawal Disbursement - HERA • Credit loan for tuition and fees & room and board (without authorization) and for other charges (with authorization) • Written notification to the student / parent and their confirmation must be received before the loan funds may be credited to the account or directly disbursed

19. Written Notification (within 30 days of date of determination of withdrawal) • Identifies loan to be credited & grant and loan available as direct disbursement • Asks if student / parent wants • loan credited & • grant or loan as direct disbursement

20. Written Notification (explains) • Student / parent can accept some / all of aid • If student / parent declines credit of loan, she may not receive direct disbursement unless institution agrees • Obligation to repay loan • 14 day (or later) response time

21. Written Notification • Deadline to accept PWD either directly or as credit to account must be same • PWD must be disbursed in manner specified by student / parent within 120 days of date of determination of withdrawal

22. Written Notification • If response from student / parent is late, institution may make or not make PWD • If institution declines to make PWD, it must inform student / parent • If there is no response to notification, no loan may be credited to account & no grant or loan may be disbursed directly

23. Clock Hour Changes • Scheduled clock hours always used • Scheduled clock hours as of withdrawal divided by clock hours in period • If greater than 60%, student earns 100%

24. Clock Hour Changes • Scheduled clock hours must be: • established prior to beginning of classes (or modified before withdrawal date) • consistent with: • published materials • accrediting agency / state

25. Grant Overpayment Protection (to amounts student is required to return) • 50% of amounts disbursed (and that could have been disbursed) • $50.00 or less per program (but, not remaining balances of $50.00 or less) • Waiver of overpayments for students residing in, employed in, or attending institutions in declared disaster areas

26. Return of Funds Order • Loan Programs • Pell Grant Program • Academic Competitiveness Grant Program • National SMART Grant Program • FSEOG Program

27. R2T4 Worksheets/Software

28. Step 1:

29. Step 1: Student’s Title IV Aid • All information collected about Title IV aid either “disbursed” or “could have been disbursed” • Broken down by Grants and Loans • This is straight-forward, although the data is collected as noted on the next slide

30. Step 1: Student’s Title IV Aid • Box E. Total Title IV aid disbursed for the PP or POE • Used to determine the amount of PWD or returned

31. Step 1: Student’s Title IV Aid • Box F. Total Title IV grant aid disbursed + could have been disbursed for the PP or POE • Used to determine the TIV grants amount that is protected under HERA

32. Step 1: Student’s Title IV Aid • Box G. Total of all aid disbursed or could have been disbursed • Used to determine the amount of TIV aid earned

33. Step 2: Credit hour

34. Step 2: Clock hour

35. Step 2: Percentage of TIV Aid Earned • Credit-hour program - same as pre-HERA • If % is > 60% = 100% TIV earned

36. Step 2: Percentage of TIV Aid Earned • Clock-hour program • This becomes a one-step calculation • Hours scheduled to complete • Total hours in period (PP or POE) • If % is > 60% = 100 % TIV earned

37. Step 3:

38. Step 3: Amount of TIV aid Earned by the Student • Remains % earned (Box H) X Total of TIV aid disbursed or could have been disbursed (Box G)

39. Step 4:

40. Step 4: Total Title IV Aid to be Disbursed or Returned • PWD or Amount to be Returned • Remains same as before: • Amt earned > Amt disb’d = PWD • Amt earned < Amt disb’d = Amt to be Returned

41. Step 5:

42. Step 5: Amount of Unearned Title IV Aid Due from the School • Unearned amount of Title IV aid due from the school is calculated the same as before • Lesser of • Total amount of unearned aid, or • Institutional charges X % of unearned aid

43. Step 6:

44. Step 6: Return of Funds by the School • Return order of TIV aid has changed • Loans • Unsubsidized FFEL/DL • Subsidized FFEL/DL • Perkins • FFEL/DL PLUS (Graduate student) • FFEL/DL PLUS (Parent)

45. Step 6: Return of Funds by the School • Grants • Pell Grant • Academic Competitiveness Grant • National SMART Grant • FSEOG

46. Step 7:

47. Total amount unearned TIV aid - Amount school has to repay Amount student has responsibility to repay Step 7: Initial Amount of Unearned TIV Aid Due from the Student

48. Step 8:

49. Student repays what he has earned plus what he has not earned that the school does not repay Total TIV net loans disbursed - Amount of TIV loans school repaid Remaining balance of TIV loans Step 8: Repayment of the Student’s Loans

50. Step 8: Repayment of the Student’s Loans • If the amount of unearned less the amount the school repaid (Step 7) is greater than the remaining balance of TIV loans outstanding – go to Step 9